EXHIBIT 10.19
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of ______ __, 2004 by and among Liberte Investors Inc., a Delaware
corporation ("LBI"), and the individuals listed on Exhibit A attached hereto
(each a "USAUTO HOLDER" and collectively, the "USAUTO HOLDERS").
WHEREAS, this Agreement is entered into pursuant to the Agreement and Plan
of Merger, dated as of December __, 2003 (the "MERGER AGREEMENT"), by and among
LBI, USAH Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary
of LBI ("MERGER SUB"), USAuto Holdings, Inc., a Delaware corporation ("USAUTO"),
the USAuto Holders and each of the other stockholders of USAuto set forth on the
Schedule of USAuto Stockholders attached thereto. Capitalized terms used but not
defined in this Agreement shall have the meanings given to such terms in the
Merger Agreement;
WHEREAS, the Merger Agreement provides that, subject to the terms and
conditions therein, USAuto will be merged with and into Merger Sub in a
transaction (the "MERGER") in which all outstanding shares of USAuto Common
Stock will be converted into the right to receive, and will be exchangeable for,
LBI Common Stock and/or cash as set forth in the Merger Agreement; and
WHEREAS, as an inducement for LBI, USAuto and the USAuto Holders to approve
the Merger Agreement and the transactions contemplated therein, LBI desires to
grant certain registration rights to the USAuto Holders as contained herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
1. REGISTRATION RIGHTS.
(a) DEFINITIONS.
(i) 1933 ACT. The term "1933 ACT" means the
Securities Act of 1933, as amended.
(ii) 1934 ACT. The term "1934 ACT" means the
Securities Exchange Act of 1934, as amended.
(iii) AFFILIATE. The term "AFFILIATE" means a Person
that directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with a specified Person.
(iv) FORM S-3. The term "FORM S-3" means such form
under the 1933 Act as is in effect on the date hereof or any successor
registration form under the 1933 Act subsequently adopted by the SEC that
permits inclusion or incorporation of substantial information by reference
to other documents filed by LBI with the SEC.
(v) IMMEDIATE FAMILY. The term "IMMEDIATE FAMILY"
means, with respect to a natural Person, the spouse, parents, children,
grandchildren, siblings, mother- and father-in-law, sons- and
daughters-in-law, and brothers- and sisters-in-law of such Person.
(vi) PERMITTED TRANSFEREE. The term "PERMITTED
TRANSFEREE" means, with respect to a USAuto Holder, (A) any member of such
USAuto Holder's Immediate Family, (B) any Affiliate of such USAuto Holder,
(C) such USAuto Holder's executor, administrator, trustee, or personal
representative to whom such Registrable Securities are transferred at death
or involuntarily by operation of law, (D) any trust established by such
USAuto Holder for the benefit of such holder's Immediate Family, or (E) any
family limited partnership established by such USAuto Holder for estate
planning purposes, the limited partners of which are such USAuto Holder's
Immediate Family.
(vii) PERSON. The term "PERSON" means any human being,
organization, general partnership, limited partnership, corporation,
limited liability company, joint venture, trust, business trust,
association, governmental entity or other legal entity.
(viii) REGISTRATION. The terms "REGISTER," "REGISTERED"
and "REGISTRATION" refer to a registration effected by preparing and filing
a registration statement in compliance with the 1933 Act, and the
declaration or ordering of effectiveness of such registration statement.
(ix) REGISTRABLE SECURITIES. The term "REGISTRABLE
SECURITIES" means: (A) any shares of LBI Common Stock issued to a USAuto
Holder pursuant to Section 1.7 of the Merger Agreement (the "MERGER
SHARES"); and (B) any securities issued or issuable with respect to the
Merger Shares by way of stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. For purposes of this Agreement, any
Registrable Securities shall cease to be Registrable Securities when (x) a
registration statement covering such Registrable Securities has been
declared effective and such Registrable Securities have been disposed of
pursuant to such effective registration statement, or (y) such Registrable
Securities are transferred in a transaction that is exempt from
registration pursuant to Rule 144 under the 1933 Act or a transaction in
which the USAuto Holders' rights under this Agreement are not assigned. In
addition, the Registrable Securities held by any holder of Registrable
Securities shall cease to be Registrable Securities on such date on which
all of the Registrable Securities held by such holder can be sold pursuant
to Rule 144(k) under the 1933 Act (or any similar provision then in force).
(x) SEC. The term "SEC" or "COMMISSION" means the
United States Securities and Exchange Commission.
(b) PIGGYBACK REGISTRATIONS. LBI shall notify all holders of
Registrable Securities in writing at least 30 days prior to filing any
registration statement under the 1933 Act for purposes of effecting a public
offering of securities of LBI (including, but not limited to, registration
statements relating to secondary offerings of securities of LBI, but excluding
registration statements relating to any registration under SECTION 1(c) of this
Agreement or any
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employee benefit plan or a corporate reorganization) and will afford each such
holder of Registrable Securities an opportunity to include in such registration
all or any part of the Registrable Securities then held by such holder. Each
holder of Registrable Securities desiring to include in any such registration
all or any part of their Registrable Securities shall, within 20 days after
receipt of the above-described notice from LBI, so notify LBI in writing, and in
such notice shall inform LBI of the number of Registrable Securities such holder
wishes to include in such registration. Notwithstanding any other provision of
this Agreement, if LBI determines in good faith that a limitation of the number
of shares to be registered is required, then LBI may exclude shares (including
Registrable Securities) from the registration, and the number of shares that may
be included in the registration shall be allocated, (x) in the case of a primary
public offering of securities by LBI, first, to LBI, second, to the holders of
Registrable Securities requesting inclusion of their Registrable Securities in
such registration and, third, to the other holders of securities of LBI
requesting inclusion of their securities in such registration and, (y) in the
case of a secondary public offering of LBI securities, first, to the holders of
securities of LBI requesting registration of their securities and, second, to
the holders of Registrable Securities requesting inclusion of their Registrable
Securities in such registration. If LBI excludes shares from the registration as
described in the preceding sentence, then with respect to the Registrable
Securities then held by any holders of Registrable Securities, the number of
Registrable Securities to be included in the registration shall be in such
proportion as the number of Registrable Securities then held by such holder of
Registrable Securities bears to the total number of Registrable Securities then
held by all holders of Registrable Securities participating in the registration.
If a holder of Registrable Securities does not include all of its Registrable
Securities in any registration by LBI, such holder shall nevertheless continue
to have the right to include any Registrable Securities in any subsequent
registration or registrations by LBI with respect to offerings of its
securities, all upon the terms and conditions set forth herein.
(i) UNDERWRITING. If a registration statement under
which LBI gives notice under this SECTION 1(b) is for an underwritten
offering, then LBI shall so advise the holders of Registrable Securities as
a part of the notice referred to in this SECTION 1(b). In such event, the
right of any such holder of Registrable Securities to be included in a
registration pursuant to this SECTION 1(b) shall be conditioned upon such
holder's participation in such underwriting and the inclusion of such
holder's Registrable Securities in the underwriting to the extent provided
herein. All holders of Registrable Securities proposing to distribute their
Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing underwriter or
underwriter(s) selected for such underwriting. Notwithstanding any other
provision of this Agreement, if LBI or the managing underwriter(s)
determines in good faith that a limitation of the number of shares to be
underwritten is required, then LBI or the managing underwriter(s) may
exclude shares (including Registrable Securities) from the registration and
the underwriting, and the number of shares that may be included in the
registration and the underwriting shall be allocated, (x) in the case of a
primary public offering of securities by LBI, first, to LBI, second, to the
holders of Registrable Securities requesting inclusion of their Registrable
Securities in such registration and, third, to the other holders of
securities of LBI requesting inclusion of their securities in such
registration and, (y) in the case of a secondary public offering of LBI
securities, first, to the holders of securities of LBI requesting
registration of their securities and, second, to the holders of Registrable
Securities requesting inclusion of their Registrable Securities
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in such registration. If any holder of Registrable Securities requesting
inclusion of its Registrable Securities disapproves of the terms of any
such underwriting, such holder may elect to withdraw therefrom by written
notice to LBI and the managing underwriter(s), delivered at least ten
business days prior to the effective date of the registration statement.
Any Registrable Securities excluded or withdrawn from such underwriting
shall be excluded and withdrawn from the registration.
(ii) EXPENSES. All expenses incurred in connection
with registrations pursuant to this SECTION 1(b) (excluding underwriters'
and brokers' discounts and commissions and fees and expenses of counsel to
any holder of Registrable Securities including Registrable Securities in
any such registration), including, without limitation, all federal and
"blue sky" registration and qualification fees, printers' and accounting
fees, and fees and disbursements of counsel for LBI, shall be borne by LBI.
(c) FORM S-3 REGISTRATION. If at any time after the third
anniversary of the date of this Agreement, LBI receives from any holder of
Registrable Securities or group of holders of Registrable Securities holding at
least 25% of all Registrable Securities then outstanding a written request or
requests that LBI effect a registration on Form S-3 and any related
qualification or compliance, then LBI will:
(i) NOTICE. Promptly give written notice of the
proposed registration and the holder's or holders' of Registrable
Securities request therefor, and any related qualification or compliance,
to all other holders of Registrable Securities. Each holder of Registrable
Securities desiring to include in any such registration all or any part of
the Registrable Securities held by such holder shall, within 20 days after
receipt of the above-described notice from LBI, so notify LBI in writing
and, in such notice, shall inform LBI of the maximum number of Registrable
Securities such holder wishes to include in such registration.
(ii) REGISTRATION. As soon as practicable, effect
such registration and all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale and distribution of up
to all of the Registrable Securities then outstanding. The number of
Registrable Securities of each holder included in such registration shall
be allocated on a pro rata basis based on the total number of Registrable
Securities requested to be included in such registration by the requesting
holders and the holders of Registrable Securities joining in such request
as specified in a written request given within 20 days after receipt of
such written notice from LBI; provided, however, that LBI shall not be
obligated to effect any such registration, qualification or compliance
pursuant to this SECTION 1(c):
(A) if Form S-3 is not available for such offering
by the holders of Registrable Securities;
(B) if the holders of Registrable Securities propose
to sell Registrable Securities at an aggregate price to the public of
less than $2,000,000;
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(C) if LBI shall furnish to the holders of
Registrable Securities a certificate signed by the Chairman of LBI
stating that in the good faith judgment of the Board of Directors of
LBI, it would be materially detrimental to LBI or its business for
such Form S-3 registration to be effected at such time or, if such
Form S-3 registration has already been effected, for resales of
Registrable Securities to be made pursuant to such Form S-3
registration statement, in which event LBI shall have the right to
defer the filing of the Form S-3 registration statement no more than
once during any 12-month period for a period of not more than 180
days after receipt of the request of the holder or holders of
Registrable Securities under this SECTION 1(c) and the use of the
Form S-3 registration statement and the prospectus related thereto
will be deferred or suspended and will not recommence until (x) the
holders of Registrable Securities requesting inclusion of their
Registrable Securities in such Form S-3 registration receive from
LBI copies of the supplemented or amended prospectus related to the
registration statement or (y) the holders of Registrable Securities
requesting inclusion of their Registrable Securities in such Form
S-3 registration are advised in writing by LBI that the prospectus
related to the registration statement may be used, as applicable;
provided, however, that if LBI shall so delay the filing of a
registration statement, it shall promptly notify the applicable
holders of Registrable Securities of such determination, and such
holders of Registrable Securities shall have the right to withdraw
the relevant request for registration, in which case such
registration shall not count towards the limit set forth in SECTION
1(c)(ii)(D);
(D) if LBI has already effected a registration on
Form S-3 for the holders of Registrable Securities pursuant to this
SECTION 1(c) within the twelve (12)-month period immediately
preceding receipt of the written request for such registration;
(E) if the SEC refuses to declare such registration
statement effective due to the participation of any particular
holder of Registrable Securities in such registration (unless such
holder of Registrable Securities withdraws all such holder's
Registrable Securities from such registration) or if the manner in
which any Registrable Securities are disposed of pursuant to the
Form S-3 registration statement is not included within the plan of
distribution set forth in the prospectus for the Form S-3
registration statement; or
(F) in any particular jurisdiction in which LBI
would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration,
qualification or compliance.
Subject to the foregoing, LBI shall file a Form S-3 registration statement
covering the Registrable Securities and other securities so requested to be
registered pursuant to this SECTION 1(c) as soon as practicable, and in any
event no later than 90 days, after receipt of the request or requests of
the holders of Registrable Securities for such registration.
(iii) EXPENSES. LBI shall pay all expenses incurred in
connection with the registration requested pursuant to this SECTION 1(c)
(excluding underwriters' or brokers' discounts and commissions), including,
without limitation, all filing, registration
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and qualification, printers' and accounting fees and the reasonable fees
and disbursements of one (1) counsel for the selling holder or holders of
Registrable Securities and counsel for LBI. Each holder of Registrable
Securities participating in such registration shall bear such holder's
proportionate share (based on the number of shares sold by such holder over
the total number of shares included in such registration at the time it
goes effective) of all discounts, commissions or other amounts payable to
underwriters or brokers in connection with such offering.
(iv) MANNER OF SALES. Any sale of Registrable
Securities pursuant to a registration effected pursuant to this
SECTION 1(c) may only be made in accordance with the method or methods of
distribution of such Registrable Securities that are described in the
registration statement for the registration and permitted by such form of
registration statement. No sale of Registrable Securities pursuant to any
registration effected pursuant to this SECTION 1(c) may be effected
pursuant to any underwritten offering without LBI's prior written consent,
which consent will not be unreasonably withheld.
Notwithstanding anything to the contrary contained herein, in the event of
the death of either USAuto Holder prior to the third anniversary of the
date hereof, such USAuto Holder's executor, administrator, trustee, or
personal representative to whom such USAuto Holder's Registrable Securities
are transferred upon such death shall be entitled to request the
registration of such Registrable Securities pursuant to the terms of this
SECTION 1(c) at any time thereafter, provided that any such request and
registration shall be subject to all of the other limitations specified
herein.
(d) OBLIGATIONS OF LBI. Whenever required to effect the
registration of any Registrable Securities under this Agreement, LBI shall, as
expeditiously as reasonably practicable:
(i) prepare and file with the SEC a registration
statement relating to the applicable registration on the appropriate form
under the 1933 Act, which form shall be available for the sale of the
Registrable Securities in accordance with the intended method or methods of
distribution thereof and shall include all financial statements of LBI, and
use commercially reasonable efforts to cause such registration statement to
become effective; provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, including documents
incorporated by reference after the filing of the registration statement,
LBI will furnish one counsel selected by the holders of a majority of the
shares of Registrable Securities covered by such registration statement,
copies of all such documents proposed to be filed, which documents, subject
to compliance with applicable securities laws, will be subject to the
review of such counsel, and LBI will not file any registration statement or
amendment thereto or any prospectus or any supplement thereto (excluding
any documents incorporated by reference) to which such counsel shall
reasonably object;
(ii) prepare and file with the SEC such amendments
and post-effective amendments to the registration statement as may be
necessary to keep the registration statement effective for the applicable
period specified (but in no event shall LBI be required to keep such
registration statement effective for more than 12 months), or such
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shorter period which will terminate when all Registrable Securities covered
by such registration statement have been sold; cause the prospectus to be
supplemented by any required prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the 1933 Act; and comply with the
provisions of the 1933 Act with respect to disposition of all securities
covered by such registration statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such registration statement or supplement to
the prospectus; LBI shall not be deemed to have used commercially
reasonable efforts to keep a registration statement effective during the
applicable period if it voluntarily takes any action that would result in
selling holders of the Registrable Securities covered thereby not being
able to sell such Registrable Securities during that period unless such
action is required under applicable law; provided that the foregoing shall
not apply to actions taken by LBI in good faith and for valid business
reasons, including without limitation, merger, acquisition or divesture of
assets or other material transaction, so long as LBI promptly thereafter
complies with the requirements of SECTION 2(d)(ix) hereof, if applicable;
(iii) notify the selling holders of Registrable
Securities promptly, and (if requested by any such Person) confirm such
notification in writing, (A) when the prospectus or any prospectus
supplement or post-effective amendment has been filed, and with respect to
the registration statement or any post-effective amendment, when the same
has become effective, (B) of any request by the SEC for amendments or
supplements to the registration statement or the prospectus or for
additional information, (C) of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose, (D) of the receipt by LBI
of any notification with respect to the suspension of the qualification of
the Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose and (E) of the happening
of any event which makes any statement made in the registration statement,
the prospectus or any document incorporated therein by reference untrue or
which requires the making of any changes in the registration statement, the
prospectus or any document incorporated therein by reference in order to
make the statements therein not misleading;
(iv) use commercially reasonable efforts to obtain
the withdrawal of any order suspending the effectiveness of the
registration statement at the earliest possible moment;
(v) furnish to each selling holder of Registrable
Securities, without charge, at least one signed copy of the registration
statement and any post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference
and all exhibits (including those incorporated by reference);
(vi) deliver to each selling holder of Registrable
Securities, without charge, as many copies of the prospectus (including
each preliminary prospectus) and any amendment or supplement thereto (in
each case including all exhibits) as such Persons may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by
such Person; LBI consents to the use of the prospectus or any amendment or
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supplement thereto by each of the selling holders of Registrable Securities
in connection with the offering and sale of the Registrable Securities
covered by the prospectus or any amendment or supplement thereto;
(vii) prior to any public offering of Registrable
Securities, use commercially reasonable efforts to register or qualify or
cooperate with the selling holders of Registrable Securities and their
respective counsel in connection with the registration or qualification of
such Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as any seller reasonably requests in writing
and do any and all other acts or things reasonably necessary or advisable
to enable the disposition in such jurisdictions of the Registrable
Securities covered by the registration statement; provided, however, that
LBI shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions;
(viii) cooperate with the selling holders of
Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing
any restrictive legends except as required by the Certificate of
Incorporation of LBI; and enable such Registrable Securities to be in such
denominations and registered in such names as the holders of such
Registrable Securities may request at least two business days prior to any
sale of Registrable Securities;
(ix) upon the occurrence of any event contemplated by
SECTION 2(d)(iii)(E) above, subject to LBI's ability to postpone the
preparation of such supplement or amendment pending the public announcement
of a material event such as a merger or acquisition or divestiture of
assets, prepare a supplement or post-effective amendment to the
registration statement or the related prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, the prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(x) cause all shares owned by the holders of
Registrable Securities covered by the registration statement to be listed
on each securities exchange on which similar securities issued by LBI are
then listed; and
(xi) make available for inspection by representatives
of the holders of the Registrable Securities and any attorney or accountant
retained by the sellers, all financial and other records, pertinent
corporate documents and properties of LBI and cause LBI's officers,
directors and employees to supply all information reasonably requested by
any such representative, attorney or accountant in connection with such
registration; provided that any records, information or documents that are
designated by LBI in writing as confidential shall be kept confidential by
such Persons unless disclosure of such records, information or documents is
required by court or administrative order.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from LBI of the
happening of any event of the kind
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described in SECTION 2(d)(ix) hereof, such holder will forthwith
discontinue disposition of Registrable Securities until such holder's
receipt of the copies of the supplemented or amended prospectus
contemplated by SECTION 2(d)(ix) hereof, or until it is advised in writing
(the "ADVICE") by LBI that the use of the prospectus may be resumed, and
has received copies of any additional or supplemental filings which are
incorporated by reference in the prospectus, and, if so directed by LBI
such holder will deliver to LBI (at LBI's expense), all copies, other than
permanent file copies then in such holder's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
(e) FURNISH INFORMATION. It shall be a condition precedent to
the obligations of LBI to take any action pursuant to SECTION 1(b) or 1(c) that
the selling holders of Registrable Securities shall furnish to LBI such
information regarding themselves and the Registrable Securities held by them,
and the intended method of disposition of such securities, as shall be
reasonably required to timely effect the registration of their Registrable
Securities.
(f) INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under SECTION 1(b) or (c).
(i) BY LBI. To the extent permitted by law, LBI will
indemnify and hold harmless each holder of Registrable Securities that has
included Registrable Securities in such registration statement, any
underwriter (as defined in the ▇▇▇▇ ▇▇▇) for such holders, each of their
respective representatives and agents and such holders' of Registrable
Securities legal counsel and independent accountants, and each person, if
any, who controls such holder of Registrable Securities or underwriter
within the meaning of the 1933 Act or the 1934 Act, against any and all
losses, claims, damages or liabilities to which they may become subject
under the 1933 Act, the l934 Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions
or violations (each of the following being a "VIOLATION"):
(A) any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein,
offering circular, or other document or any amendments or supplements
thereto incident to any such registration, qualification or compliance;
(B) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or
(C) any violation or alleged violation by LBI of the
1933 Act, the 1934 Act, any federal or state securities law or any rule
or regulation promulgated under the 1933 Act, the 1934 Act or any
federal or state securities law in connection with any action or
inaction by LBI in connection with the offering covered by such
registration statement;
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and LBI will reimburse each such holder of Registrable Securities, each of
their respective representatives and agents and such holder's legal counsel
and independent accountants, underwriter or controlling person if any, for
any legal or other expenses reasonably incurred by them, as incurred, in
connection with investigating, preparing or defending any such loss, claim,
damage, liability or action; provided however, that the indemnity agreement
contained in this SUBSECTION 1(g)(i) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of LBI (which consent shall not
be unreasonably withheld or delayed), nor shall LBI be liable in any such
case for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing for use in
connection with such registration by such holder of Registrable Securities,
representative, agent, legal counsel, independent accountant, underwriter
or controlling person, if any, of such holder of Registrable Securities.
(ii) BY SELLING HOLDERS OF REGISTRABLE SECURITIES. To
the extent permitted by law, each selling holder of Registrable Securities,
severally but not jointly, if Registrable Securities held by such holder of
Registrable Securities are included in the securities as to which such
registration, qualification or compliance is being effected, will indemnify
and hold harmless LBI, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls LBI
within the meaning of the 1933 Act, any underwriter and any other holder of
Registrable Securities selling securities under such registration
statement, each of their respective representatives and agents and such
holder's legal counsel and independent accountants, or any person who
controls such holder within the meaning of the 1933 Act or the 1934 Act,
against any and all losses, claims, damages or liabilities (joint or
several) to which they may become subject under the 1933 Act, the 1934 Act
or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any Violation under SUBSECTION 1(g)(i)(A) or (B), in each case to the
extent (and only to the extent) that such Violation under SUBSECTION
1(g)(i)(A) or (B) occurs in reliance upon and in conformity with written
information furnished by such holder of Registrable Securities for use in
connection with such registration; and each such holder of Registrable
Securities will reimburse any legal or other expenses reasonably incurred
by LBI or any such director, officer, controlling person, underwriter or
other holder of Registrable Securities, representative, agent, legal
counsel, independent accountant or controlling person of such other holder
of Registrable Securities in connection with investigating, preparing or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this SUBSECTION 1(g)(ii)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of the applicable holder of Registrable Securities (which consent
shall not be unreasonably withheld); and provided further, that the total
amounts payable in indemnity by a holder of Registrable Securities under
this SECTION 1(g)(ii) in respect of any Violation under SUBSECTION
1(g)(i)(A) or (B) shall not exceed the net proceeds received by such holder
of Registrable Securities in the registered offering out of which such
Violation under SUBSECTION 1(g)(i)(A) or (B) arises.
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(iii) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any
Person entitled to indemnification hereunder will (A) give prompt notice to
the indemnifying party of any claim with respect to which it seeks
indemnification and (B) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, however, that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel
and to participate in the defense of such claim, but the fees and expenses
of such counsel shall be at the expense of such Person unless (x) the
indemnifying party has agreed to pay such fees or expenses, (y) the
indemnifying party shall have failed to assume the defense of such claim
and employ counsel reasonably satisfactory to such Person or (z) based upon
advice of counsel of such Person, a conflict of interest may exist between
such Person and the indemnifying party with respect to such claims (in
which case, if the Person notifies the indemnifying party in writing that
such Person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not be permitted to assume
the defense of such claim on behalf of such Person), in each of which
events the fees and expenses of such counsel shall be at the expense of the
indemnifying party. The indemnifying party will not be subject to any
liability for any settlement made without its consent (but such consent
will not be unreasonably withheld), but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such
action or proceeding, the indemnifying party shall indemnify and hold
harmless the indemnified parties from and against any loss or liability (to
the extent stated above) by reason of such settlement or judgment. No
indemnified party will be required to consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
(iv) DEFECT ELIMINATED IN FINAL PROSPECTUS. The
foregoing indemnity agreements of LBI and the holders of Registrable
Securities are subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or remedied in
the amended prospectus on file with the SEC at the time the registration
statement in question becomes effective or the amended prospectus filed
with the SEC pursuant to SEC Rule 424(b) (the "FINAL PROSPECTUS"), such
indemnity agreement shall not inure to the benefit of any person or entity
if a copy of the Final Prospectus was furnished to the indemnified party
and was not furnished to the person or entity asserting the loss, claim,
damage or liability at or prior to the time such action is required by the
1933 Act.
(v) CONTRIBUTION. In order to provide for just and
equitable contribution to joint liability under the 1933 Act in any case in
which either (A) any holder of Registrable Securities exercising rights
under this Agreement, or any controlling person of any such holder of
Registrable Securities, makes a claim for indemnification pursuant to this
SECTION 1(g) but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact
that this SECTION 1(g) provides for indemnification in such case, or (B)
contribution may be required on the part of LBI and any such selling holder
of Registrable Securities or any such controlling person in circumstances
for which
11
indemnification is provided under this SECTION 1(g); then, and in each such
case, such indemnifying party will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after
contribution from others) (x) in such proportion so that such holder of
Registrable Securities is responsible for the portion represented by the
percentage that the public offering price of its Registrable Securities
offered by and sold under the registration bears to the public offering
price of all securities offered by and sold under such registration, and
LBI and other selling holders of Registrable Securities are responsible for
the remaining portion or (y) if the allocation provided by clause (x) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (x) above but
also the relative fault of LBI and the holders of Registrable Securities in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of LBI and of the holders of Registrable
Securities shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information
supplied by LBI or by the holders of Registrable Securities and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The holders' of
Registrable Securities respective obligations to contribute pursuant to
this SECTION 1(g)(v) are several in proportion to the respective number of
Registrable Securities they sell in the offering as to which such Violation
relates, and not joint. No such holder of Registrable Securities will be
required to contribute any amount in excess of the public offering price of
all such Registrable Securities offered and sold by such holder of
Registrable Securities pursuant to such registration statement; and no
person or entity guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the ▇▇▇▇ ▇▇▇) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent misrepresentation.
(vi) SURVIVAL. The obligations of LBI and the holders
of Registrable Securities under this SECTION 1(g) shall survive the
completion of any offering of Registrable Securities in a registration
statement, and otherwise.
(g) RULE 144. LBI hereby agrees that it will file the reports
required to be filed by it under the 1933 Act and the 1934 Act and the rules and
regulations adopted by the SEC thereunder, and it will take such further action
as any holder of Registrable Securities may reasonably request, all to the
extent required from time to time to enable such holder to sell Registrable
Securities without registration under the 1933 Act within the limitation of the
exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may be
amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any holder of Registrable Securities,
LBI will deliver to such holder a written statement as to whether it has
complied with such information and requirements.
2. HOLD-BACK AGREEMENTS. Each holder of Registrable
Securities agrees that, in connection with an underwritten public offering of
LBI equity securities, upon the request of LBI or the principal underwriter
managing such public offering, no shares of LBI equity securities held by such
holder may be sold, offered for sale or otherwise disposed of without the prior
written consent of LBI or such underwriter, as the case may be, for up to one
hundred
12
eighty (180) days after the effectiveness of the registration statement filed in
connection with such offering, if all of LBI's directors and officers agree to
be similarly bound, and releases from any and all lock-up agreements in
connection with such offering are granted on a pro-rata basis. This SECTION 2
shall no longer apply six (6) months after the holder ceases to be an officer,
director or 5% or more stockholder of LBI, as the case may be.
3. ASSIGNMENT AND AMENDMENT.
(a) ASSIGNMENT. Notwithstanding anything herein to the
contrary:
(i) REGISTRATION RIGHTS; REFUSAL RIGHTS. The
registration rights of a holder of Registrable Securities under SECTION 1
hereof may be assigned only to a Permitted Transferee or a party who
acquires at least 940,000 shares of Registrable Securities (as such number
shall be adjusted for stock splits, dividends, combinations and similar
transactions); provided, however, that no party may be assigned any of the
foregoing rights unless LBI is given written notice by the assigning party
at the time of such assignment stating the name and address of the assignee
and identifying the securities of LBI as to which the rights in question
are being assigned; and provided further that any such assignee shall
receive such assigned rights subject to all the terms and conditions of
this Agreement, including, without limitation, the provisions of this
SECTION 3.
(ii) AGGREGATION. Shares of LBI Common Stock owned by
holders of Registrable Securities which are partnerships, limited liability
companies, corporations and other entities having substantially common
ownership interests or managed by the same principals or investment
advisors or owned by individual investors affiliated with one another
("AFFILIATED INVESTORS") shall be aggregated for the purposes of this
Agreement, and, notwithstanding anything to the contrary contained in this
Agreement, all rights granted to the holders of Registrable Securities
pursuant to this Agreement may be assigned between Affiliated Investors.
(b) AMENDMENT OF RIGHTS. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of LBI and holders of Registrable Securities (and/or any of
their permitted successors or assigns) holding shares of LBI Common Stock
representing a majority of all the Registrable Securities. Any amendment or
waiver effected in accordance with this SECTION 3(b) shall be binding upon each
holder of Registrable Securities and/or any of their permitted successors or
assigns and LBI.
4. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS; NO EXISTING
REGISTRATION RIGHTS. From and after the date of this Agreement, LBI shall not,
without the prior written consent of the Persons owning in the aggregate at
least a majority of the Registrable Securities then issued and outstanding enter
into any agreement with any holder or prospective holder of any securities of
LBI which would allow such holder or prospective holder to include such
securities in any registration filed under Section 1(c) of this Agreement,
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of such holder's securities will not reduce the
13
amount of the Registrable Securities of the USAuto Holders and their permitted
successors and assigns which is included. LBI represents and warrants to the
USAuto Holders that other than (i) that certain Registration Rights Agreement,
dated as of July 1, 2002, between LBI and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and (ii) that
certain Registration Rights Agreement, dated as of August 16, 1996, between LBI
and ▇▇▇▇▇▇'▇ ▇▇▇▇/Ford, Ltd., a Texas limited partnership, there are no
"registration rights" relating to securities of LBI that exist on the date
hereof other than those provided herein.
5. MISCELLANEOUS.
(a) NOTICES. Any and all notices required or permitted to be
given to a party pursuant to the provisions of this Agreement shall be in
writing and shall be effective and deemed to provide such party sufficient
notice under this Agreement on the earliest of the following: (i) at the time of
personal delivery, if delivery is in person; (ii) one business day after deposit
with an express overnight courier for United States deliveries, or three
business days after such deposit for deliveries outside of the United States,
with proof of delivery from the courier requested; or (iii) three business days
after deposit in the United States mail by certified mail (return receipt
requested) for United States deliveries. All notices for delivery outside the
United States will be sent by express courier. All notices not delivered
personally will be sent with postage and/or other charges prepaid and properly
addressed to the party to be notified at the address as follows, or at such
other address as such other party may designate by one of the indicated means of
notice herein to the other parties hereto as follows:
(i) if to a USAuto Holder, at such USAuto Holder's
respective address as set forth on Exhibit A hereto;
(ii) if to any other holder of Registrable
Securities, at such address and to the attention of such person as such
holder of Registrable Securities has specified by prior written notice to
LBI; and
(iii) if to LBI, marked "Attention: President", at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Any party may change its address or the designation of the intended
recipient of notice provided that it notifies the other party(ies) in accordance
with the terms of this Section 5(a).
(b) ENTIRE AGREEMENT. This Agreement, together with all the
Exhibits hereto, and the Merger Agreement and each of the other agreements and
documents referred to therein, constitute and contain the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersede any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations between the parties respecting the subject
matter hereof.
(c) GOVERNING LAW. This Agreement shall be governed by and
construed exclusively in accordance with the internal laws of the State of
Delaware, without giving effect to any choice of law or conflict of law
provision (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Delaware. All disputes arising out of this Agreement or the obligations of
the parties hereunder, including disputes that may arise following termination
of this Agreement, shall be subject to the exclusive jurisdiction of the
Chancery or other courts of the State of Delaware.
14
(d) SEVERABILITY. If any covenant or provision hereof is
determined to be void or unenforceable in whole or in part, it shall not be
deemed to affect or impair the invalidity of any other covenant or provision,
each of which is hereby declared to be separate and distinct. If any provision
of this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable. If any provision of this
Agreement is declared invalid or unenforceable for any reason other than
overbreadth, the offending provision will be modified so as to maintain the
essential benefits of the bargain among the parties hereto to the maximum extent
possible, consistent with law and public policy.
(e) THIRD PARTIES. Nothing in this Agreement, express or
implied, is intended to confer upon any person or entity, other than the parties
hereto and their permitted successors and assigns, any rights or remedies under
or by reason of this Agreement.
(f) SUCCESSORS AND ASSIGNS. Subject to the provisions of
SECTION 3(a), the provisions of this Agreement shall inure to the benefit of,
and shall be binding upon, the successors and permitted assigns of the parties
hereto including, without limitation and without the need for an express
assignment, subsequent holders of Registrable Securities.
(g) CAPTIONS. The captions to sections of this Agreement have
been inserted for identification and reference purposes only and shall not be
used to construe or interpret this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(i) COSTS AND ATTORNEYS' FEES. In the event that any action,
suit or other proceeding is instituted concerning or arising out of this
Agreement or any transaction contemplated hereunder, the prevailing party shall
recover all of such party's costs and attorneys' fees incurred in each such
action, suit or other proceeding, including any and all appeals or petitions
therefrom.
(j) ADJUSTMENTS FOR STOCK SPLITS, ETC.. Wherever in this
Agreement there is a reference to a specific number of shares of LBI Common
Stock, then, upon the occurrence of any subdivision, combination or stock
dividend of such stock occurring after the date of this Agreement, the specific
number of shares so referenced in this Agreement shall automatically be
proportionally adjusted to reflect the affect on the outstanding shares of such
stock by such subdivision, combination or stock dividend.
[Remainder of Page Intentionally Left Blank]
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In Witness Whereof, the parties hereto have executed this Agreement as of
the date first above written.
LIBERTE INVESTORS INC.
By:
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer and President
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
[Signature Page to Registration Rights Agreement]
16
EXHIBIT A
SCHEDULE OF USAUTO HOLDERS
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
[ADDRESS FOR NOTICE]
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
[ADDRESS FOR NOTICE]
17